Oil Extends Losing Streak To Record 12 Sessions: What's Driving Prices Lower?

Oil Extends Losing Streak To Record 12 Sessions: What's Driving Prices Lower?

The downturn has been going on for several weeks, as the US and Russian Federation showed signs of higher levels of production and Saudi Arabia appeared willing to let prices fall. The decline in prices continued last week after the United States said it would let eight countries keep importing Iranian oil.

Brent dropped US$1.97 a barrel, or 2.8 per cent, to a low of US$68.15 and was trading at around US$68.40 by 1045 GMT.

Oil's fall accelerated on Tuesday, with U.S. futures dropping to lows not seen in 11 months due to ongoing worries about weakening global demand, oversupply and selloffs across other asset classes, including equities.

In this context, then, it is no surprise OPEC officials, notably Saudi Arabia's Khalid al-Falih have started to talk about production cuts again for fear of another glut like the one that dragged prices below US$30 a barrel four years ago.

In its monthly report, Opec said world oil demand in 2019 would rise by 1.29 million barrels per day (bpd), 70,000 bpd less than predicted last month and the fourth consecutive forecast cut.

President Donald Trump has tweeted that they shouldn't cut production, setting up a standoff between the USA administration and OPEC before it meets in Vienna on December 6.

Stocks of oil marketing companies too gained in value as brent crude prices fell below $69 per barrel.

Saudi Arabia, a prominent member of the oil cartel, said it would cut exports by as much as 500,000 barrels per day (bpd) in November and December to curb oversupply.

Brent Crude is not down more than 20 percent from its recent high, officially putting it in bear market territory.

Spot prices in September were significantly higher than those for later delivery, a structure known as backwardation that implies a tight market as it is unattractive to put oil into storage.

"The market now increasingly looks concerned about the prospect of too much supply", said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.

But Trump has made it clear he wants oil prices to fall. In July, Trump called the organization a "monopoly", warning on Twitter that "gas prices are up & they are doing little to help".

The U.S. has meanwhile allowed some of its allies - Greece, India, Italy, Japan, South Korea, Taiwan and Turkey - as well as rival China to continue to purchase Iranian oil despite re-imposed sanctions, as long as they work to reduce their imports to zero.

With the U.S. now the world's top oil producer ahead of Saudi Arabia and Russian Federation, there are indications that traders will keep selling crude at lower prices as a result of oversupply. Output, however, rose by 127,000 bpd to 32.9 million bpd, OPEC said.

Related Articles

  • Czechs 2-0 up on United States  in Fed Cup final

    Czechs 2-0 up on United States in Fed Cup final

    It was the ideal start for the Czechs, winners of five of the last seven Fed Cup titles and unbeaten in 10 home ties since 2009. The clash will begin with Kenin taking on Barbora Strycova before Riske faces Katerina Siniakova .

    De Minaur having ‘hell of a year’

    Tsitsipas overcame the meltdown as he went on to prevail 4-3 (3) 3-4 (5) 4-0 2-4 4-3 (2) over his Russian opponent. And I think this is little bit not fair because the other guys, they have little more chances to win always.
    Alibaba Singles' Day tops $30bn but growth rate plunges

    Alibaba Singles' Day tops $30bn but growth rate plunges

    Still, there's some uncertainty this year, as the trade war and deflating asset values threaten to disrupt economic growth. The company surpassed the 100 billion yuan mark less than 2 hours into Singles' Day, according to Alibaba's news website.
  • Third ODI: South Africa survive a fighting knock from WA’s Shaun Marsh

    Third ODI: South Africa survive a fighting knock from WA’s Shaun Marsh

    We absorbed the good bowling and waited for an opportunity to put the pressure back on, that started happening in the 35th over. South Africa's bowlers, who more than did their bit in the first two games, were overshadowed by their batsmen for a change.
    Boris Johnson's brother resigns and calls for a second Brexit referendum

    Boris Johnson's brother resigns and calls for a second Brexit referendum

    The government has not yet agreed a withdrawal deal with the European Union, ahead of the UK's exit from the bloc next March. However, Labour leader Jeremy Corbyn distanced himself from Mr Johnson's demand for a new Brexit vote.
    Roger Federer explains ATP Finals argument with umpire: 'Now I am angry'

    Roger Federer explains ATP Finals argument with umpire: 'Now I am angry'

    In the later match in the Lleyton Hewitt group, second seed and six-time champion Roger Federer takes on Japan's Kei Nishikori . ROGER FEDERER (37/Switzerland/3): The exception-rounder is aiming for seventh title at the ATP Finals and the 100.
  • Israeli raid shakes fragile truce in Gaza

    Israeli raid shakes fragile truce in Gaza

    Israel and Palestinian militants in Gaza have fought three wars since 2008 and recent unrest has raised fears of a fourth. The IDF said though that the operation was "not meant to kill or abduct terrorists, but to strengthen Israeli security".

    Houston in talks with Carmelo over role with Rockets

    He signed a one-year deal with the Rockets in the summer after he was traded from the Oklahoma City Thunder to the Atlanta Hawks . So much so, after only a few weeks into the season, the Rockets are already contemplating if they can even go forward with him.
    Cesar Sayoc Indicted On Charges Carrying Potential Life Prison Penalty

    Cesar Sayoc Indicted On Charges Carrying Potential Life Prison Penalty

    Sayoc was held without bail , after being arrested outside a south Florida auto parts store. Postal Service recovered all 16 padded manila envelopes containing IEDs, prosecutors said.
  • Botched Israeli raid in Gaza sparks violent exchanges

    Botched Israeli raid in Gaza sparks violent exchanges

    There was also an anti-tank missile strike on an Israeli bus near the Gaza border, in which an IDF soldier was seriously wounded. IDF said that at least 200 launches were identified, with about 60 interceptions by Israel's Iron Dome missile defense system.
    How Harry and Meghan helped Kate and Wills rekindle their romance

    How Harry and Meghan helped Kate and Wills rekindle their romance

    One features the Prince with his wife Camilla, the Duchess of Cornwall , which is from their 2015 Christmas card. Prince Charles is a doting grandfather to Prince George , Princess Charlotte and Prince Louis .
    Manchester City's Raheem Sterling signs new five-year deal with club

    Manchester City's Raheem Sterling signs new five-year deal with club

    Guardiola said that it was good of his players to control the game but there was no need for Sterling's showboating. Guardiola chose to bring off Aguero for Ilkay Gundogan with 15 minutes remaining to protect City's 2-1 lead.